The PVIL Shareholder Trust
PVIL’s Board has developed a Settlement Trust to provide a permanent source of long term distributions to PVIL’s Shareholders. Settlement Trusts are a special type of trust authorized by the Alaska Native Claims Settlement Act (ANCSA) and Alaska law to provide benefits to shareholders of Alaska Native corporations. Settlement trusts provide for permanence, protection from creditors, and substantial tax savings.
PVIL’s Directors are the Trustees of the Trust, and PVIL’s shareholders are the beneficiaries of the Trust. The Trust’s income will be distributed from time to time as determined by the Trustees. The Trustees can make three types of cash distributions to PVIL’s shareholders once the Trust’s assets reach $5 million. First, the Trustees in their discretion can distribute up to 10% of the Trust’s annual income to provide an elder’s benefit to PVIL shareholders aged 65 or older. Second, the Trustees in their discretion can distribute up to 10% of the Trust’s annual income to provide educational benefits to PVIL’s shareholders. Third, the Trustees in their discretion can distribute the annual income that is not used to provide an elder’s benefit or educational benefits to all of the shareholders proportionate upon the number of shares of PVIL stock each shareholder owns. The distributed cash will be earned from investment of the assets placed in the Trust by PVIL. Distributions of the Trust’s principal are prohibited, which will hopefully allow the Trust to grow to benefit future generations of PVIL shareholders.
Contributions to the Trust will be made in the discretion of PVIL’s Board, primarily from PVIL’s future profits. Assets in the Trust are protected from the creditors of PVIL as well as the creditors of PVIL’s shareholders. Once assets are placed in the Trust, the assets cannot go back to PVIL.
Every PVIL shareholder will automatically own the same number of trust units as that shareholder owns PVIL shares. Thus if you own 100 voting PVIL shares, you will own 100 voting trust units in the Trust. When PVIL shares are transferred, such as through a gift of shares or upon the death of a Shareholder, the same number of Trust Units will automatically be transferred to the same person who receives the PVIL shares.
PVIL’s Trust will be taxed at very favorable tax rates compared to PVIL. PVIL’s shareholders will also receive important tax savings from the Trust, in that distributions of after tax income are not taxable to the shareholder/beneficiaries and do not even have to be reported on their individual tax returns. While PVIL has been able to make tax free distributions in the past to its shareholders pursuant to a provision known as the Alaska Native Fund, PVIL is unable to continue to do so. This means that future distributions by PVIL will be taxable.